The institutional basis of economic failure

Anatomy of the Segmented Business System

Bibliographic Data

ID4237476
AuthorsGeoffrey Wood (0000-0002-6690-338X), Jedrzej George Frynas
Year2006
Volume4
Issue2
Pages239-277
Publication date2006-05-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueSocio-Economic Review (JOURNAL)
Journal identifiersISSN: 1475-1461 • E-ISSN: 1475-147X
PublisherOxford University Press (PUBLISHER • GB)
DOI10.1093/ser/mwj034
OpenAlexW1976746463
LanguageEN
Citations received26
References cited57

There has been a glaring lack of research on institutional configurations, which impede rather than promote economic success. Building on Richard Whitley's business systems theory and based on the experience of East Africa, this paper attempts to fill a gap in the literature by identifying a distinct variety of capitalism, the segmented business system. Segmented business systems are characterized by rigid internal divisions between different areas of economic activity. The relative impermeability of barriers between the latter partially accounts for their weak track record; this is mitigated—but, in some cases, exacerbated—through the operation of informal networks of support. Whilst segmented business systems would seem to be characterized by consistent institutional failure, specific aspects thereof have proved highly functional to elite interests. However, given their vulnerability to external and internal pressures, segmented business systems are likely to remain locked in a cycle of generally poor and uneven economic performance in the absence of radical reforms.

Business · Business cycle · Business failure · Capitalism · Computer security · Economic system · Economics · Elite · Industrial organization · Macroeconomics · Market economy · Political science · Variety (cybernetics) · Vulnerability (computing) · Computer Science · Finance · Global and Cross-Cultural Management · Natural Resources and Economic Development · World Systems and Global Transformations